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This case involves parental kidnapping by a father in Florida who took his son out of the country on a 32 foot sail boat. In U.S. v. Martikainen the defendant pleaded guilty to the charge of international parental kidnapping (18 U.S.C. §1204(a)), for leaving his the United States with his son. His sentence was enhanced under §3C1.2 for “recklessly creating a substantial risk of death or serious bodily injury to another person in the course of fleeing from a law enforcement officer.” The Eleventh Circuit Court of Appeals reversed the federal sentence enhancement imposed under the Federal Sentencing Guidelines.

Here is what the father did. Following a contentious battle with his ex-wife over visitation with his son, Martikainen, was under court order to have only supervised visitation with the child. Martikainen purchased the sail boat he painted grey. Not long after, during a supervised visit with his child, he absconded with his son while the supervisor was in the restroom. He drove his son to a marina where he boarded the sailboat, which he had purchased a few days after the court initially entered the order, and headed to the Gulf of Mexico towards the Yucatan Peninsula. In route, the Coast Guard found them and monitored his direction for hours before finally boarding the boat. Martikainen fully cooperated with the agents in turning over the child.

While the court agreed that Martikainen’s conduct did create a substantial risk of death or serious bodily injury to his son for these reasons:
• he had no license as a boat captain,
• no experience as a sailor,
• the boat was painted grey,
• the boy had no life jacket when found.
However, the court found that this sentencing guidelines provision is only applicable where the defendant knows he is fleeing from a law enforcement officer who is in pursuit.
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According to a report by Jay Weaver of the Miami Herald, a Federal Judge issued an arrest warrant for lawyer Michael Walsh for his failure to appear in Federal Court. Walsh failed to show up for the start of a Federal mortgage fraud trial for John Guaracino on Monday May 9, 2010. The Federal mortgage fraud trial is the second of two related mortgage fraud cases involving law enforcement officers, mortgage brokers, title processors and lawyers who were charged with conspiracy to defraud banks by falsifying mortgage loan applications. U.S. District Judge James Cohn issued a “Show Cause” order for Walsh to appear the following day to explain why Walsh should not be held in contempt. When he failed to show for the Show Cause hearing, Judge Cohn issued an arrest warrant for the attorney’s arrest. Prosecutors have accused Guaracino, a Plantation police officer, of recruiting other officers from the Plantation Police Department to join a conspiracy to defraud the banks.

The first trial in April ended with the acquittal of three officers according to the Ft. Lauderdale SunSentinel. Prosecutors tried to argue that the officers lied on loan applications to qualify for mortgage loans totaling $16 million, which they could not otherwise afford on their salaries. The defense claimed the lies were placed on the mortgage applications without their knowledge by unscrupulous mortgage brokers who handled the transactions. The brokers testified for the government under plea deals, admitting they forged signatures and submitted false information on applications they handled.

Guaracino’s trial will likely be postmarked as a result of his attorney’s failure to show for trial. Walsh’s problems also include a pending assault charge that arose from a dispute he had with his estranged wife. According to the Herald article, Walsh got into an argument with his wife over visitation rights and allegedly shoved her to the kitchen floor and dragged her by the hair to another room. A hearing on that case was scheduled for the same day he was supposed to be in Federal court. It is unknown as of this publishing whether Walsh has been found.

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In some areas of the country, substantial numbers of single family homes fell into foreclosure. In other markets, large numbers of condominiums suffered wholesale foreclosures. People purchased homes for inflated prices borrowing up to 95 to 97 percent of the purchase price, acquiring creative mortgages with low teaser rates or balloon mortgages. In a booming real estate market buyers felt confident their purchase could be sold within a year or two for a profit. With the collapse of the real estate market, large scale mortgage foreclosures put many banks under or near the brink. As auditors and investigators began examining the loan documents, they found many cases of borrower fraud. Real estate fraud gained top priority in the Department of Justice following the fall in the real estate market.

A mortgage fraud investigation begins by focusing on the mortgage application, a form known as the Fannie Mae Form 1003 (Uniform Residential Loan Application) a standard form for all banks. It presents the borrower’s financial statement and informs the bank of the borrower’s income, assets and liabilities. When properties fell into wholesale foreclosures, auditors and investigators poured over mortgage applications finding inflated numbers. Mortgage fraud investigations found inflated income or in some cases non-existent jobs and income. Fraudulent application might show a nonexistent bank account. In some cases a borrower might falsely state the house would be the borrower’s primary residence, thus qualifying for a lower interest rate and seen as a safer risk. The false financial information in the 1003 Form was important to the bank’s decision to lend money to a borrower, leading the bank to conclude the borrower qualified for the loan. This made it a federal crime because it is federal crime to present materially false information to an FDIC insured institution.

Banks did not escape blame. Accusations were made that banks’ lending practices facilitated fraudulent loans. Some banks offered no documentation loans which did not require backup documents, commonly tagged “liar loans.” Accusations against bank officers claimed they turned a blind eye to obvious fraudulent borrowers by not carefully verifying the financial information submitted in a loan. While the bank practices do not excuse the crime of making false statements to a bank, the booming real estate market and the easy money, created a fertile soil for rampant fraud. As a result, ordinary law abiding citizens turned into criminals.

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A bankruptcy trustee is a private individual, usually a C.P.A. or with similar financial expertise, who is appointed by the U.S. Trustee in Federal Bankruptcy Court and given the job of safeguarding the assets of a bankruptcy estate. The job includes collecting the assets and property belonging to the estate, keeping detailed and accurate records of all funds received and disbursed, and making regular reports of financial activities during the estate administration. It is a job that requires a person who can be trusted with an enormous amount of money. Unfortunately it did not work out that way for Marika Tolz, who had been a trustee for the Miami Bankruptcy Court for over 20 years. For the past seven years, she and other coconspirators regularly dipped into funds from bankruptcy estates to which she had been appointed as trustee to safeguard, and used these funds for her own benefit. On May 5, 2011, Marika Tolz pled guilty in Federal Court in Miami to a one-count information charging her with committing Federal wire fraud in violation of 18 U.S.C. Section 1349. The wire fraud statute is commonly used in prosecuting Federal white collar crimes.

After taking out funds from one bankruptcy estates, she would continue to misappropriate funds from other estates to restore the balance of other fiduciary accounts from which she had previously removed funds. In one specific transaction on May 20, 2010, Tolz caused a one million dollar wire transfer from the Bank of America Trust Account of Buchanan, Ingersol, and Rooney PC into the Sun American Bank Marika Tolz General Trust Account. These funds had been earmarked as forfeiture proceeds for the victims in the Scott Rothstein Ponzi scheme in Florida (United States v. Scott Rothstein, 09-60331-cr-Cohn). Those funds were instead used by Tolz to cover a previously issued $967,856 check and replace monies taken from the Driscoll bankruptcy estate.

Losses from this fraud totaled about $2.4 million, while at least $16 million was misappropriated from numerous matters to which she had been appointed as trustee, to cover the previously removed funds. Sentencing is scheduled for July 27, 2011 before U.S. District Judge Jose Martinez. The guilty plea was reported by Ina Paive Cordle, a writer for the Miami Herald.

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This was case is an example of a cyber crime investigation in Miami that focused on the using the internet to solicit minors for illegal illicit sexual activities. In U.S. v. Lanzon the defendant was indicted for persuading a minor to “engage in prostitution or any sexual activity for which any person an be charged with a criminal offense, or attempts to do so.” (18 U.S.C. §2422) The indictment alleged an attempt to violate Florida Statute §800.04(4)(a), (engaging in sexual activity with a person under 16.) Lanzon, who was convicted in Miami Federal Court, argued that the government failed to prove its case at trial and he filed a motion warrantless search of his truck, which yielded key evidence in the case.

A Miami-Dade Police Detective of the Sexual Crimes Bureau created an on online profile for himself as “Tom” living with his girlfriend and her 14 year-old daughter. He entered an internet chat room and began communicating with Lanzon. After a while the topic turned to Tom’s daughter. What ensued over the next several conversations was Lanzon’s expression about his sexual interest in the minor which turned to discussing a time and place near a motel to meet so Lanzon could act out his sexual desires. Lanzon was arrested when he approached the undercover officer at a prearranged meeting spot. Though he refused to give consent to search his truck, they used Lanzon’s key to enter the truck and seized specific items that they discussed he would bring: multi-colored condoms and mint flavored lubricant, evidence that corroborated his online conversations and his intent to engage in sexual activity.

Lanzon claimed the government failed to prove a violation of Fl. Stat. 800.04(4)(a) which he asserts criminalizes only a completed sex act. He also argued he did not take a substantial step toward completing the illegal act. The court of appeals disagreed, concluding the federal statute still criminalized the attempt to commit a sexual act even if the state statute required the completed act. Therefore even if the defendant attempted to persuade the minor to engage in illicit sexual activity but does not actually engage in the sex act, §2422 is still violated.

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American Therapeutic Corporation pled guilty to operating a chain of clinics in South Florida that submitted seven years of fraudulent Medicare claims amounting to nearly $200 million dollars. The company was shut down at the end of 2010 in the wake of a lengthy federal investigation that revealed the company had operated one of the largest mental health Medicare fraud schemes in the country. The Justice Department had filed a superseding indictment in February, 2011, charging the corporation and its principals Lawrence Duran and Marianella Valera with Medicare fraud. The Justice Department announced that the Medicare program paid American Therapeutic alone approximately $83 million dollars for unnecessary treatment or for treatment that was never received. Fraudulent claims included partial hospitalization programs connected with the treatment of mental illness.

Money was funneled from American Therapeutic to its subsidiary Medilink, to pay off employees and others. The principals started a company known as American Sleep Institute (ASI) that purportedly provided sleep study services which also provided extensive false Medicare claims. Fraudulent claims were also made for the treatment of sleep disorders for patients that were not in need of it.

The companies’ principals Lawrence Durand and Marianella Valera pled guilty last month to extensive fraud charges that included conspiracy to submit false claims to Medicare by falsifying medical records and paying kickbacks to assisted living facilities for patients. Over 20 individuals were charged in this conspiracy with the couple including doctors, patient recruiters and employees. The charges outlined in the indictment describe submitting false claims to Medicare through American Therapeutic for services that were not medically necessary. Other charges included the following:

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Three additional individuals were charged in West Palm Beach Federal court in a federal mortgage fraud indictment, making 24 the total number of persons who have been indicted in the multi-million dollar Versailles mortgage fraud scheme. Carl Alexander and Carol Asbury were the two most recent persons indicted. Alexander headed up a firm known as PTL Housing & Investments which purchased homes in the upscale Wellington community called Versailles. The indictment charges a violation of the mail fraud statute, 18 U.S.C. §1341, a statute commonly used in white collar criminal cases.

Alexander, one of the most prominent players of the defendants, had two personal bankruptcies and a foreclosure filing when his company secured a $1.05 million home in Versailles. According to the federal criminal indictment, Alexander was in charge of recruiting buyers, usually people of modest means to serve as straw or bogus buyers who were paid anywhere from $700 to $15,000 to purchase a home to have homes purchased in their own names.

Fraudulent closing documents were prepared by a real estate broker David Lam and Asbury concealed the fact that lenders were loaning more money than the actual price of the home. The three defendants pocketed the difference between the loan and home price, an amount estimated at almost $1.8 million on the sale of four homes. Six others have been charged in recent weeks in connection with the Versailles mortgage fraud, including former pro football and University of Florida player Patrick Brinson.
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The federal mail fraud statute, 18 U.S.C. §1341, makes it a federal crime to use the mail in any way to advance a fraud. The federal wire fraud statute, 18 U.S.C. §1343, makes it a federal crime to use any interstate wire communication to advance a fraud. The defendants here were charged and convicted of violating the wire fraud and mail fraud statutes because of their involvement in defrauding investors who invested in telecommunications companies known as competitive local exchange carriers (CLEC’s). A CLEC is an entity that acquires discounted local retail telecommunication services from Baby Bells for resale to the public without any infrastructure costs of their own. The Unites States Attorney presented the following evidence showing the defendants intended to defraud the investors:

• they solicited 8 million dollars from investors for several CLECs,

• the CLECs they started made no money and eventually fell into bankruptcy,

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Schmitz was an Alabama State legislator convicted of the Federal crime of mail fraud and theft of federal funds. The mail fraud statute (Title 18 USC §1341) makes it a crime to use the mail to advance a fraud. The theft statute (Title 18 USC §666) makes it a crime to embezzle, steal, or otherwise obtain federal funds by fraud. The government presented evidence that Schmitz used her state legislator position to obtain a job with a federally funded program for at-risk youth (“Program”) and performed little or no work during her employment. To conceal this scheme, she wrote letters to obtain a flexible work schedule, submitted false statements about the number of hours she worked and the volume and nature of her work.

The Eleventh Circuit Court of Appeals found this white collar defendant used her position as a legislator to have he job specifically created for her, rarely showed up a the office, and failed to complete tasks given her. She wrote a letter requesting a flexible work schedule allowing her to work from remote locations and preventing her supervisor from knowing how little she was doing. She submitted fraudulent reports about her work hours and work activity. The court found she never intended to work at the program and used her political connection to keep the pay for no work scheme going.

The indictment charging theft of federal funds was insufficient to put defendant on notice of the offense. The court found the allegations in the indictment were legally insufficient because they simply alleged that she was an agent of the Program which received federal funds and that she knowingly and willfully embezzled, stole, obtained funds by fraud without any factual allegations of the fraud. It failed to incorporate or re-alleged the mail fraud counts. The court found the counts were insufficient because they provided “absolutely no factual detail regarding the scheme to defraud the Program.” The verdict was thrown out because the jury relied on a legally insufficient allegation to convict the defendant.

Cross examination by prosecutor pressing the defendant to give her opinion of whether other witnesses who gave inconsistent testimony were lying was error. The defendant took the stand. On cross the prosecutor pointed out that her testimony conflicted with several of the government’s witnesses and pressed her to answer his question “were they lying?” In closing the prosecutor continued to refer to the list of lying witnesses. The Eleventh Circuit found it was error to ask the questions for these reasons:

• the Federal Rules of Evidence do not allow for a witness to say another witness was lying in another occasion,
• it invades the province of the jury to decide this issue,
• the question ignore the other possible explanations for inconsistent testimony – memory loss, difference in perceptions, genuine misunderstandings that have nothing to do with a deliberate intent to deceive.
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United States v. Ibarguen-Mosquera is the latest of many Eleventh Circuit cases testing the consititutionality of a seizure of a boat by the Coast Guard on international waters. Here the seizure of this boat resulted in a Federal criminal offense. Defendants were crew members aboard a vessel described as an unmarked semi-submersible vessel in the Eastern Pacific Ocean off the coast of Colombia. The vessel was spotted sitting low in the water by the Coast Guard which sent a helicopter to investigate. As the Coast Guard helicopter began picking up crew members, the vessel sank as the crew member jumped in the water. All were charged with violations of the Drug Trafficking Vessel Interdiction Act (DTVIA), 18 U.S.C. section 2285, which makes it a federal crime to operate a submersible vessel in international waters without nationality and with intent to evade detection. The law was designed to prohibit use of vessels intended to evade detection from use in trafficking in drugs, weapons, and people.

The defendants challenged the constitutionality of the statute on four grounds:

• the enactment exceeded Article I powers • the phrase semi-submersible and intent to evade are unconstitutionally vague;

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